Smaller borrowing requirement than expected in January

The January primary borrowing requirement was SEK 2.6 billion smaller than projected. The main reason was smaller disbursements by some of the state agencies that had disbursements larger than expected in December. At the same time the net payments to tax accounts was somewhat larger than expected.

 

Interest payments on the central government debt in January were SEK 1.8 billion larger than projected. The main part of the forecast error can be assigned interest payments on loans in foreign currency.

 

For the twelve-month period ending January 31, the borrowing requirement amounted to SEK 35 billion. The central government debt amounted to SEK 1,248 billion at the end of January 2003.

 

New measure of the central government debt

 

The Government has decided that a more accurate method of measuring the central government debt is to be used starting in 2003. The new measure is based on an estimate of the debt that includes derivative instruments valued at their nominal final value in accordance with the same principles in effect in the EU. These changes do not affect the central government's actual economic position, but they do enable reporting by the Swedish National Debt Office to provide a better picture of the size and structure of the central government debt. The Debt Office has been using the new measure in its official reports since the beginning of the year.

 

One advantage of the new measure is that the debt is officially reported inclusive of derivatives such as swaps and forward foreign exchange contracts. It gives a more accurate picture of the structure of the debt because a large part of the foreign currency debt has its origins in derivatives. For a long time, the Debt Office has been showing the debt inclusive of derivatives alongside the official measure of the debt.

 

Previously the debt measured at nominal final value was not reported. The change affects primarily the value of treasury bills and inflation-linked bonds. Until now they have been reported at acquisition value, without taking accrued interest or inflation compensation into account.

 

On December 31, 2002, the debt measured using the new method (the white column in the diagram) came to SEK 1,204.3 billion. The official measure was SEK 1,160.3 billion. The increase of SEK 44 billion is due to unrealised exchange rate losses associated with the derivatives, as well as to the nominal final ­value of treasury bills and inflation-linked bonds, which is greater than the acquisition value.

 

At the turn of the year, the central government debt according to the new measure was composed of 56 per cent nominal debt, 31 per cent foreign currency debt, and 13 per cent inflation-linked debt. Under the old measure the equivalent shares were 70 per cent nominal debt, 18 per cent foreign currency debt, and 12 per cent inflation-linked debt. The differences are almost entirely due to the new measure's reflection of the central government's foreign currency exposure via derivatives. This measure is the most relevant to cost and risk.

 

The outcome of central government borrowing requirement for February will be published on March 6, 2003, at 9.30 a.m. A revised forecast for 2003 will be published on February 19, 2003, at 9.30 a.m.

For additional information, please contact:

 

Lars Hörngren, Chief Economist, tel. +46 8 613 47 36

Peter Lundkvist, Senior Economist, tel. +46 8 613 47 84